How to buy stocks for beginners is question I get asked a lot and one that I I struggled with at the start of my interests in the stock market. There's so much information out there it's so difficult to narrow down and focus on one area. Then of course there's so many technical terms that get thrown around. Bear and bull markets, P / E ratio what does it all mean and how can you get a handle on this? Well in short, I plan to give you a jump start in the stock market in 5 easy steps. I can not promise to make you rich but I can promise to make you a little wiser before jumping and buying those penny stocks.
1) Buy The Intelligent Investor by Ben Graham. It's one of the best stock market books ever written (lauded by Warren Buffett no less) and laid the foundation for the idea of Value Investing. Once you've read the book … read it again! Ensure you take in the concepts of Value Investing and it may help you in deciding which stocks to go for.
2) Sign up for a free account with Yahoo Finance. I can not rave enough about how useful this tool is for researching companies. It also goes into great lengths about what each synonym means. The community within Yahoo is also fantastic with numerous knowledgeable people on hand to help you.
3) Sign up for free stock broker account through which you'll be able to purchase shares. This will be specific country so I can not recommend any particular one but ensure to do you research before handing over your bank account details! The majority or brokerage companies provide you with all kinds of stats and tools much like Yahoo Finance.
4) Start putting the lessons learned from the Intelligent Investor into action. Identify companies in areas that you know about. If you do not know anything about information technology, do not look at tech stocks. Stick to know what you know and you've got a better chance of identifying a good company. When you feel you've found a good company, get the annual reports for the past few years and start poring over their figures. This can be requested through the companies own website and there's typically a small fee incurred.
5) You've bought the book, got the Yahoo Finance Account, got your stock broker and identified some potential candidates to buy shares with. All that's left is to buy some stocks!
I hope this 5 step plan acts as a jump start to those of you looking up how to buy stocks for beginners . I've at least pointed you in the right direction of worthwhile material to start with. Good luck in the market!